Blackstone’s Stephen Schwarzman and Brookfield’s Bruce Flatt, chief executives of the two largest alternative asset managers, rarely show up at the same social events. But here they were, halfway across the world, in India’s oil refinery port of Jamnagar to spend a weekend in March attending the prenuptial celebrations of the youngest son and future daughter-in-law of Mukesh Ambani, Asia’s wealthiest magnate.
Rihanna belted out a blend of pop, R&B and reggae. About 100 chefs prepared 500 different dishes. Emerald-and-diamond pendants, some worth a luxury Manhattan apartment, clung about the necks of the most prominent women, dubbed the new Maharanis. The spectacle and the delicacies were great draws, but the fact is neither Schwarzman nor Flatt (nor the hundreds of other invited business leaders) could afford not to show up for the Ambani bash.
As foreign capital pivots away from China, a handful of Indian multibillionaires, including Ambani and his biggest rival, Gautam Adani, have become crucial partners for any large investment firm seeking to cash in on the subcontinent’s rising fortunes.
“India checks all the boxes,” Flatt says, citing the country’s economic surge, huge internal market, young labor force and openness to foreign capital.
“But business is pretty much concentrated in people who own the largest companies,” says Schwarzman, who describes Ambani as “a great friend of mine.”
Blackstone and Brookfield are the ranking — and increasingly rivalrous — private equity and alternative asset managers in India. Almost every other month brings multibillion-dollar deals by the two behemoths: former Maharajah palaces converted into luxury hotels by Brookfield; sprawling business parks erected by Blackstone in the major cities; Brookfield wind farms on the coastal plains off the Bay of Bengal; a leading electric vehicle component company acquired and taken public by Blackstone.
Inevitably, some of their biggest deals involve wooing the same magnates — most conspicuously, Ambani, who has relied on both Brookfield and Blackstone to further expand his far-flung empire.
The two alternative asset managers bring different, equally successful business models to India.
Brookfield, with $995 billion in assets under management, excels in operations. The Toronto-based giant has a reputation for raising underperforming utilities to profitability or creating them from scratch.
“We put our own people on the ground to build out all our businesses ourselves and operate them,” Flatt says.
Brookfield is also deft at dealing with family businesses — even those riven by internal strife like the Ambanis.
Blackstone, with over $1 trillion in AUM, is known for identifying trends before competitors, quickly funneling investments into those sectors and creating multiple revenue streams.
According to Blackstone President Jonathan Gray, in India the overarching trend is the rise of the middle class and the assorted opportunities its burgeoning members provide.
“Just look at what they consume in retail, real estate, financial services, travel,” he says, noting that these are all among the businesses in which Blackstone is investing.
But both firms share some similar traits in India. They are control freaks, refusing almost all deals that leave management in the hands of local investors. Blackstone and Brookfield also embrace business strategies — such as investments in office buildings and shopping malls — that are under threat back in the U.S. And thanks to their scale and deep pockets, both can afford patience, waiting years for the right moment to make or exit an investment.
To be sure, foreign investors large and small are flocking to India. Outsiders hold 40 percent of the booming stock market. Other investors choose to acquire minority stakes in family firms, which still dominate India’s business world. But often they drop out when second-generation owners take the companies in new, costlier directions, ignoring opposition by their foreign partners.
The most successful foreign asset managers are well-known giants that can make or share management decisions over firms in which they have invested. KKR has channeled $3 billion into infrastructure and energy developments. Carlyle Group bought a majority stake in VLCC, a leading local skin care and wellness company founded by a couple, Vandana and Mukesh Luthra. Japan’s Nippon Life Assurance acquired one of the largest mutual funds, Reliance Mutual Fund, from Mukesh Ambani’s younger brother, Anil.
“If you look at profitability in asset management, it absolutely favors the larger players,” says Vivek Pandit, senior partner for consultancy McKinsey in India.
Scale matters most on both sides of the equation, he adds. For foreign asset managers, deals with the biggest family conglomerates mean they won’t have to spend years building a distribution network for their goods and services. For an Indian firm, a brand-name foreign asset manager brings capital and expertise.
Of the 15 largest business deals in India tracked by management consultancy Bain last year, seven involved Blackstone, Brookfield, Ambani or Adani.
Scale also counts because the biggest foreign managers can catch the ear of the highest government officials to press for business reforms. For example, both Blackstone and Brookfield claim credit for helping persuade Prime Minister Narendra Modi and his economic team to allow the introduction of Real Estate Investment Trusts, REITs, in the financial system.
The rivalry between Brookfield and Blackstone in India can best be seen through their business dealings with Ambani.
At first, Blackstone seemed to have the edge. For several years, the Ambani brothers, Mukesh and Anil, visited Schwarzman in New York annually seeking Blackstone investments.
But brotherhood soured into sibling strife after the 2002 death of the father, Dhirubhai Ambani. The sons battled for control of his Reliance Industries, India’s richest private sector empire. Unable to reconcile the brothers, their mother, Kokilaben, split the business in 2005, granting the larger part of Reliance Industries to Mukesh. Anil renamed his portion Reliance Group.
But the brothers’ quarrel escalated into a melodrama worthy of Bollywood. They pummeled each other in the media at home and abroad. Anil brought a multibillion-dollar defamation suit against his older brother. He also asserted Mukesh colluded with government officials to gain contracts. In the end, Mukesh emerged the winner while Anil struggled to keep his business afloat under heavy debts.
Not wishing to antagonize either brother, Schwarzman steered clear of the conflict and decided Blackstone should temporarily forgo any business deals with the Ambanis.
That’s when Brookfield pounced.
“India is not for the faint of heart,” says Anuj Ranjan, who established and oversaw the firm’s franchise there for more than a decade and was ultimately rewarded with his present position as CEO of Brookfield’s entire private equity business. “But it’s worth the hard work.”
Ranjan spent his first five years in India unable to close a single deal. So he was eager to do business with either Ambani brother.
At first, Brookfield bet on Anil, negotiating for part ownership of his company’s 43,000 telecom towers. But the agreement collapsed in 2017 owing to regulatory obstacles. That turned out to be a blessing in disguise for Brookfield because it opened the way for far larger deals with Mukesh.
With market conditions temporarily deteriorating in India, even Mukesh Ambani was struggling and decided to sell assets for the first time. Under a buy-and-leaseback deal for $1.87 billion completed in 2019, Brookfield acquired Reliance Industries’ East-West Pipeline. It runs almost 1,000 miles from the Indian Ocean to the Bay of Bengal, supplying natural gas to a big chunk of the country. In return, Reliance retained the right to continue using the pipeline and received a portion of net earnings from its use by other companies.
“That was our first major investment and acquisition of a business in India,” Ranjan says. “We built a really great relationship with Mukesh Ambani, so we felt comfortable when the opportunity came up for an even bigger deal with him.”
That opportunity came soon enough. In 2020, Brookfield acquired 157,000 telecom towers from Reliance Industries for $8 billion — of which $3.7 billion was in equity and $4.3 billion in assumed debt. The deal, another buy-and-leaseback, gave Reliance continued use of the telecom network while opening it to other Brookfield clients.
Business ties between Brookfield and Ambani strengthened further as Reliance Industries expanded into telecommunications and entertainment.
Close relations with Modi’s government proved vital when Ambani muscled his way into telecommunications. Regulators eased provisions regarding minimum pricing for phone calls. Ambani’s Jio cell service then relied on free calls and cheap data transmission to undercut its main rival, Vodafone Idea, the Vodafone subsidiary in India.
This created a domino effect. Vodafone Idea was the largest user of telecom towers owned by American Tower in India. As Vodafone Idea’s fortunes waned, so too did losses mount at American Tower.
Earlier this year, Brookfield became India’s largest owner of telecom towers with the $2.5 billion purchase of American Tower’s 77,000 towers. That brought Brookfield’s total to 232,000 telecom towers in India, vaulting the Canadian firm into the lead among the country’s fast-growing digital cellular networks.
Ambani’s Jio became India’s largest carrier, with 450 million subscribers, and the biggest user of Brookfield’s telecom towers. Jio then merged with Ambani’s entertainment business, Viacom18, to create the largest television and digital streaming firm in India.
By mid-2024, deals with Mukesh Ambani accounted for almost half of Brookfield’s $25 billion of investments in India.
At this point, Blackstone resurfaced as Brookfield’s rival in their courtship of Ambani.
While Brookfield used its infrastructure prowess to advance its ties with Ambani, Blackstone emerged as the country’s leading commercial real estate landlord. Last year, Ambani became Blackstone’s largest tenant when Viacom18 signed a deal for its new headquarters in Mumbai. The space covers 410,000 square feet, the equivalent of seven football fields. Financial details were not disclosed.
Blackstone’s assets in India are valued at $50 billion, far larger than its total in any other Asian country. “India is our best-performing market in private equity returns,” says Amit Dixit, head of Asia for private equity.
Of Blackstone’s asset total in India, $20 billion is invested in commercial real estate, mainly office spaces and shopping malls. At first glance, this might seem surprising because those sectors have been hard hit in the U.S. and Europe due to high borrowing costs and increasing vacancies.
“Demand for office space in India is stronger and vacancy rates are only a fraction of what they are in the U.S.,” Gray explains.
Also, Blackstone adapts lessons learned in the U.S. and U.K. to enhance returns on its investments in office buildings and shopping centers in Indian cities.
In both the U.S. and India, grade-A malls combine retail, food, and entertainment to draw foot traffic. But the resemblances end there. In India, nobody takes to the highways to reach malls miles away. Because of the population density and traffic congestion, people shop within walking distance. The most successful malls are placed in growing middle-class neighborhoods and offer supermarkets, restaurants, cinemas, sports and game facilities — all in air-conditioned spaces that are a relief from hot, cramped residences relying only on fans.
Blackstone has assembled such malls across 14 cities, annually drawing 130 million people – almost twice the population of the U.K.
The firm has taken a similar approach to offices. Its properties are sprawling, centrally located business parks surrounded by greenery rather than just free-standing towers. To draw and keep tenants in place, they come with amenities such as food courts, gyms, and access to cricket fields.
“A huge component of our success has been our emphasis on tenant engagement,” says Tuhin Parikh, head of Blackstone’s India real estate business. “As tenants become more sophisticated, they will want to pay more for quality.”
Adding to the aura of sophistication is the presence in Blackstone business parks of blue-chip foreign tenants such as Google, Microsoft, JPMorgan, Goldman Sachs, Wells Fargo and Citigroup. A sizeable portion of space is also leased to many of the 40 portfolio companies controlled by Blackstone’s private equity business — a strategy well-tested in the U.S. and Europe.
But unquestionably, Blackstone’s top success thus far in its Indian commercial real estate business is the deal that gained Viacom18 as a tenant.
Blackstone took a build-it-and-they-will-come approach that mirrored grade-A commercial real estate projects in the U.S., such as Hudson Yards in Manhattan. The firm assembled one of the largest office building sites in the middle of Mumbai.
When Ambani created a new media business centered on Viacom18, he decided to bring all the separate offices together in one choice location serviced by nearby train stations.
“We offered the only solution that met all criteria,” Parikh says.
Blackstone has had bumpier dealings with another major part of the Ambani empire — Reliance Retail, India’s largest consumer retailer. Reliance Retail ended leases for its outlets in nine shopping malls owned by Blackstone during the 2020 COVID lockdown. The conflict arose over rental payments, with Reliance seeking waivers or rebates and Blackstone declining those requests based on lease agreements.
But since then, Reliance Retail has launched new stores in various locations owned by Blackstone.
Renewable energy is becoming the new arena of competition between Brookfield and Blackstone.
With the fastest-growing economy among major nations, India faces huge electricity demands to power factories and cool offices and homes. Coal, oil and, gas remain the chief sources of energy. But renewables — mainly solar and wind — are now cheaper than hydrocarbons for electricity production. And Ambani and Adani pledged to invest $150 billion in renewables over the next decade.
Profit margins in renewable energy tend to be low because the cost of solar panels and wind turbines are the same for every investor. That puts a premium on scale and operational efficiency. As the world’s largest private investor in renewable energy, Brookfield claims competitive advantages in both respects.
In India, Brookfield has taken an eclectic approach to renewables as a capital provider, operating partner, or standalone owner.
It entered the market in 2017 by taking a controlling stake in TerraForm Power, a U.S.-based solar energy equipment supplier that included a modest portfolio of Indian assets. In subsequent deals, Brookfield acquired Indian companies with existing renewable energy operations that it expanded. It also raised $1 billion for an Indian developer of hydrogen fuel. And Brookfield ended 2023 by creating of a 50-50 joint venture with Axis Energy, a local firm, to develop greenfield renewable projects.
Brookfield announced this year that it intends to more than triple its renewable energy assets in India to $10 billion by 2028. That target would be most easily achieved through deals with Ambani or Adani.
“But the opportunity in this market is so large and growing so fast that there’s room for many other participants,” says Connor Teskey, Brookfield’s president and its CEO for renewable energy.
Blackstone’s approach to renewable energy is more indirect. Beginning in 2018, it acquired Sona Comstar, a parts maker for electric vehicles with a domestic and global clientele. In 2021 and 2023, Blackstone sold off its shares in Sona Comstar for almost $1.3 billion, or a more than 300 percent profit. The transactions highlighted Blackstone’s strategic approach to investment and divestment, focusing on building and then monetizing its stake in a company.
One of Blackstone’s goals in India is to become a significant player in data centers to service its e-commerce warehouse space that it predicts will reach at least 100 million square feet — equivalent to 3.6 square miles — over the next three years. These warehouses are leased by e-commerce retailers as distribution centers for the final stage in the delivery of products to consumers.
Data centers consume enormous amounts of electricity, most of which will be supplied by renewable sources. This will necessarily draw investments from Ambani and Adani as part of their green energy commitments.
Brookfield has already gained a step on Blackstone. In a joint venture, Brookfield and Reliance Industries are developing large, renewable energy-powered data centers to meet the needs of digital services companies and other enterprises in major cities.
Politics plays an outsized role in business dealings involving the biggest Indian moguls, who enjoy a close relationship with Modi.
Modi’s ties with Ambani and Adani go back to his tenure as chief minister between 2001 and 2014 of the west coast state of Gujarat.
Modi developed an economic model that relied on granting concessional tax, land, and other benefits to big local corporations, incentivizing them to invest and dominate their business sectors nationwide.
Ambani was a huge beneficiary. Even before Modi became Gujarat’s chief minister, Reliance was a brand name in infrastructure, natural gas, and petrochemicals.
Adani was a different case. He began as a provincial businessman in Gujarat. But he caught Modi’s attention in 2002, when rioting in Gujarat resulted in up to 2,000 deaths, most of them Muslims. Many local businesspeople criticized Modi for being complicit with the rioters or failing to stop the killings and destruction. But Adani was one of the few to openly defend Modi. He soon vaulted to the top of the Gujarat business community alongside Ambani.
When Modi became prime minister in 2014, he scaled up his Gujarat strategy, aiming to create national champions. Over the past decade, there has been a sharp increase in investments in roads, rails, airports, ports, and energy — sectors in which both Ambani and Adani are strong.
“There’s a tacit understanding that the interests of Modi and of these conglomerates happen to intersect,” says Milan Vaishnav, director of the South Asia program at the Carnegie Endowment for International Peace, who has long followed the rising fortunes of Ambani, Adani, and other magnates. “Then, by virtue of their market power and perceived proximity to Modi, they have a lot of access to key ministries and bureaucrats — in finance and infrastructure, especially — as well as to the prime minister’s office.”
The unexpectedly close election in May that returned Modi for a third term, but with less than a majority of seats in Parliament, has led both the PM and the wealthiest moguls to publicly downplay their links. Modi has voiced more concern over economic inequality and job creation — issues that the opposition used to great effect in the campaign. Meanwhile, the moguls have ramped up their efforts to reach out to the opposition.
It has been a harder sell for Adani. His conglomerate has significant investments in states under the control of opposition parties, but that hasn’t erased memories of his role as a Modi loyalist during the riots. That perception was strengthened by the government support the Adani Group received following a report last year by New York-based Hindenburg Research alleging fraud and stock manipulation.
The Modi government continued to rely on the Adani Group for investments in its economic strategy. And the Securities and Exchange Board of India — whose chairman and several of its members were appointed by the Modi government — accused Hindenburg of violating local securities law by publishing its report even though it wasn’t registered in India as a research firm.
After a steep plunge following the dissemination of the report, the Adani Group has recovered most of its market valuation. But its shares remain volatile as the controversy festers.
It has been easier for Ambani to gain acceptance from anti-Modi politicians and their supporters. He has long enjoyed cordial ties with opposition parties — something of a family tradition. Opposition leaders were prominent guests at his son’s prenuptial celebrations in March and at the wedding in July.
The close ties Brookfield and Blackstone enjoy with the leading tycoons have helped them gain regular hearings with Modi and his senior officials to push for further openings that would benefit outside investment.
“Our suggestions are almost always met with real receptivity,” says Schwarzman, who calls on Modi once a year.
A prime example is the introduction of REITs, which make real estate investment more accessible to individual investors. Of the four REITs launched in India, three were listed by Blackstone and the other by Brookfield.
High on the Blackstone and Brookfield wish list of further business reforms: permission from the Modi government to allow public companies to be taken private.
It’s increasingly possible for large foreign investment firms to go it alone in India. But it’s nearly impossible to do so in sectors the big family conglomerates have staked out for themselves, as BlackRock and Walt Disney Co. have discovered.
BlackRock first invested in India in 2008 by acquiring a 40 percent stake in a JV with a large local mutual fund manager. But when it was unable to gain a majority share and had policy disagreements with its partner, BlackRock exited India in 2018.
Last year, BlackRock announced it would be returning in a joint venture with Ambani’s Jio Financial Services to which each contributed $150 million. There is little chance BlackRock will end up as the controlling shareholder. But it can expect a windfall if the deal boosts Ambani’s chances of turning Jio Financial into India’s largest nonbank lender. Until now, such lending has been dominated by a rival family conglomerate, Bajaj Group’s Bajaj Finance.
A beaming BlackRock Chairman and CEO Larry Fink was among the prominent foreign business leaders who attended the Ambani pre-wedding celebration.
Disney embraced an altogether different strategy from BlackRock, with more dire results.
For three decades Disney struggled to gain a dominant position in India’s media market. Ambani’s Viacom18 — backed by his Reliance Industries — and Disney reached a combined 40 to 45 percent market share of streaming and ad revenue. But in 2022, Viacom18 outbid Disney’s attempt to renew its rights to stream Indian Premier League cricket — by far the country’s most viewed sport. In one fell swoop, Disney lost 11.5 million Indian subscribers.
Disney capitulated and agreed to merge its India operations with Ambani. Viacom18 and Reliance will hold 63 percent of the new venture. Moffett Nathanson, a market research firm that follows Disney’s ups and downs, called the deal “welcome news,” pointing out that India “never made significant money for the company.”
In a joint announcement of the deal in late February, Disney CEO Bob Iger professed to be thrilled by the prospect of partnering with Ambani.
Still, he was a no-show at the Ambani pre-wedding festivities a few days later.